HMRC Guidance: Non-Resident Company Disposals of UK Property
A non-resident company which has sold, gifted or transferred interests in UK property or land is required, under UK law, to register for corporation tax. The rules came into force on 6 April 2019 and extended previous rules to catch gains made by non-UK ‘property-rich’ companies.
HMRC has now published updated guidance explaining how registration can be effected. The guidance is important because many companies will now be affected given the increasing trend in recent years for foreign companies to invest in the UK real estate sector.
What’s the background?
The requirement on non-resident companies, and for collective investment vehicles (CIV) to register with HMRC is part of a wide-ranging drive by government to increase corporate transparency while boosting corporate tax receipts.
The guidance gives important information to both non-resident companies and their lawyers and agents on what they need to report for the purposes of corporation tax. Key headlines from the guidance include:
Who: The rules and the guidance apply to non-resident company not yet registered with UK Companies House; CIVs deemed as a company (such as unit trusts); and companies that were previously registered for corporation tax but have since been dormant for corporation tax purposes. Exemptions to registration are available, for instance, where a disposal is an excluded disposal and no chargeable gain or allowable loss arises.
When: registration must take place within three months of a disposal becoming chargeable to corporation tax.
How: To register, you will need to provide key information about the company or CIV, director and the disposal itself, particularly:
· The company name (and any previous name), registered address and contact details;
· Date and country of incorporation or, for a CIV, the date of establishment;
· The company registration or incorporation number if it has one;
· Director’s (or CIV authorised individual’s) name, address and contact details; and
· Date of UK land/property disposal.
If the entity has received UK rental income not subject to tax deducted at source, you will also need to supply your income tax self-assessment Unique Taxpayer Reference (UTR).
Access to the account will be through the Government Gateway (for which you will first need to register if you do not have an ID number and password).
What then? HMRC will deal with the administrative side of setting up your tax record and send you your unique corporation tax UTR and other information to your overseas office. HMRC says y ou should allow up to eight weeks to receive the information.
The guidance also sets out clearly what is required to file a return on a disposal, depending on whether it is a single ‘one off’ disposal or if further disposals are expected in the same financial year.
The payment due date of corporation tax depends on your taxable profits and length of your accounting period. The guidance can be viewed in full here.
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